🧷 Authentic Classroom Explanation by IAS Monk

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📌 The Question:

With reference to physical capital in Indian economy, consider the following pairs:

Item	Category
1. Farmer’s plough	Working capital
2. Computer	Fixed capital
3. Yarn used by the weaver	Fixed capital
4. Petrol	Working capital

How many of the above pairs are correctly matched?

(a) Only one
(b) Only two
(c) Only three
(d) All four

✅ Correct Answer: (b) Only two

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🧠 Curiosity Raiser

Why does UPSC repeatedly test fixed vs working capital using everyday objects like plough, yarn, petrol, computer?

👉 Because this topic looks simple but silently tests whether you understand time horizon of use, not the importance or cost of the item.

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📘 Enrichment Notes (UPSC Concept Clarity)

🔹 What is Physical Capital?

Physical capital consists of man-made goods used in the production process. It is broadly divided into:

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🟦 Fixed Capital

• Used repeatedly over many production cycles
• Not exhausted in one cycle
• Examples:
  • Tools
  • Machines
  • Buildings
  • Computers
  • Farmer’s plough

✔ Pair 2: Computer — Fixed capital (Correct)
❌ Pair 1: Farmer’s plough — wrongly shown as working capital
📌 A plough lasts many years → Fixed capital

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🟩 Working Capital

• Consumed within a single production cycle
• Short-term use
• Examples:
  • Raw materials
  • Fuel
  • Cash
  • Intermediate goods

✔ Pair 4: Petrol — Working capital (Correct)
❌ Pair 3: Yarn used by the weaver — wrongly shown as fixed capital
📌 Yarn is a raw material → Working capital

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🧩 Pair-wise Verdict

Pair	Status
1. Farmer’s plough – Working capital	❌ Incorrect
2. Computer – Fixed capital	✅ Correct
3. Yarn – Fixed capital	❌ Incorrect
4. Petrol – Working capital	✅ Correct

➡️ Correct pairs = 2

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🧘‍♂️ IAS Monk Whisper

What lasts is fixed, what gets exhausted is working — never confuse durability with value.